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Keene Little : 2/14/2008 11:13:09 PM

Friday's pivot tables: Link and Link

The daily SPX chart shows a bearish engulfing reversal candle for Thursday, and at resistance at the top of its down-channel from the October high: Link . This looks bearish from here but obviously it could be just a pullback at resistance before pressing higher to break the down-channel and heads higher, potentially for the 1455-1460 area.

While a break above Wednesday's high would be short term bullish, the daily pattern would not turn bullish until the Feb 1st high near 1396 is exceeded. And it's not bearish until it drops below the 1317 low on Feb 7th. In between could be a lot of choppy price action.

The 60-min chart provides a couple of more clues to watch for: Link . A break below Tuesday's 1339 low would turn the pattern at least short term bearish and considering the larger pattern I am leaning longer term bearish with that kind of break. Watch for a little H&S pattern to possibly develop at the 1339 neckline.

I continue to recommend being short the market against Wednesday's 1369 high. Thursday's pattern makes it difficult to figure out the short term move from here so we'll have to see what sets up on Friday. If we see a bounce on Friday where SPX bounces back up to its broken uptrend line from Monday, Feb 11th, currently near 1361, it would be a good place to try the short side.

OI Technical Staff : 2/14/2008 10:00:00 PM

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Jeff Bailey : 2/14/2008 5:33:49 PM

Dang ... would be good to know what the Up/DnTick Vol was before THAT one.

Jeff Bailey : 2/14/2008 5:33:12 PM

My QCharts only shows CBOE volume. Looking at 5-minute interval charts of the HEAVY VOLUME contracts. The option chain is showing all exchanges volume.

cc10-hwd.esignal.com server.

Jeff Bailey : 2/14/2008 5:32:32 PM

See the Mar $135 Put (SFB-OE). 23,000 traded on the CBOE at 04:00-05 PM. $4.20-$4.25.

Jeff Bailey : 2/14/2008 5:24:29 PM

Good gravy ... at 10:30-35 AM EST, 3,595 of the SFB-NF traded $0.63-$0.64 at the CBOE.

Jeff Bailey : 2/14/2008 5:21:51 PM

Check out that trend (8/16/07 high to 11/12/07) with your Quarterly VIX.X pivot retracement.

Jeff Bailey : 2/14/2008 5:19:30 PM

Oooooeee! ... SPY Option Chain (sorted by most active) Link .... VIX "bad tick" corrected. VIX.X low was at the open of 24.39. Right at your extended trend.

Jeff Bailey : 2/14/2008 4:53:42 PM

You can see on the daily interval chart of the USO a potential "head/should top" . The "left shoulder" at 11/21/07. Check out the short interest 11/15-11/30.

Jeff Bailey : 2/14/2008 4:48:15 PM

USO Short interest on 1/31/08 was 3,166,133 with days to covering of 2.896. Link

Jeff Bailey : 2/14/2008 4:45:05 PM

Don't forget March Crude Oil expires on Wednesday 2/20/08.

XOM / Venezuela news sparked buying from 02/07/08, and oil looks squeezed.

Jeff Bailey : 2/14/2008 4:41:42 PM

March Crude settled up $2.19, or 2.35% at $95.46.
March Unleaded up $0.0862, or +3.61% at $2.6241

Highest crack since 1/28/07 on the march contract (my daily tabulations).

Jeff Bailey : 2/14/2008 4:37:04 PM

Valero: Aruba Refinery Operating At Reduced Rates

DJ- Valero Energy Corp. (VLO) said Thursday its Aruba refinery continues to operate at reduced rates following a fire.

The vacuum unit at the 255,000-barrel-a-day refinery remains off line. The Jan. 25 fire began in this unit.

U.S. refiners recently have encountered operational snags that have interrupted fuel production. A series of high-profile refinery outages in the spring of 2007 sent gasoline futures prices skyrocketing, and there are concerns that a repeat of the situation would force up pump prices that are already high for this time of year.

Valero also said the main units at its 210,000-barrel-a-day Delaware City, Del., were operational following a power outage Sunday that led to a shutdown of the entire plant.

"We expect planned rates within a few more days," Valero spokesman Bill Day said via email.

Separately, Day confirmed that Valero has begun maintenance work on a millisecond catalytic cracker at its St. Charles refinery and that a similar unit at its Wilmington, Calif., plant is back on line.

Jeff Bailey : 2/14/2008 4:31:40 PM

California Pizza Kitchen (CPKI) $14.20 -4.37% ... ticks quiet at $14.25 on headline numbers.

Jeff Bailey : 2/14/2008 4:29:26 PM

Priceline.com (PCLN) $102.23 -2.60% ... jumps to $108 extended on headline numbers.

Keene Little : 2/14/2008 3:58:35 PM

Heading into the close and the wave pattern is unfortunately not going to help me figure out the probabilities for tomorrow morning. Even the bounce off the last low is only a corrective 3-wave move now that it has dropped back down and overlapped the first bounce off the low (looking at a 3-min chart). It's just a choppy mess.

As pointed out in last night's newsletter, the daily charts look bearish if price tips back over from resistance at the tops of the parallel down-channels from October and so far today supports the bearish view, as shown on this SPX daily chart: Link

I have the key level to the upside as the Feb 1st high near SPX 1396 but I'd consider a break above yesterday's high near 1369 as the shorter term key level now. The recommendation I had coming into today was a short against yesterday's high and that's still my recommendation. The downside potential is huge with a very small risk from here (relatively speaking).

The shorter term view (tomorrow) is the challenging one at the moment. I can't quite figure out whether to expect an early bounce tomorrow or a contiuation lower so intraday traders need to exercise caution here and hopefully some clarity will return tomorrow.

Linda Piazza : 2/14/2008 3:53:32 PM

Time to make end-of-day, and end-of-opex decisions. It's a tough one for some of you, I know. With the continued resistance on 30-minute closes at the 9-ema for the SPX and OEX, the short-term downtrend remains intact by Keltner standards. On the SPX, there's light potential Keltner support joining the light historical support from the day's low, with the Keltner support at 1347.22. Next support is rising and is likely to be converging with the Tuesday low of 1339.36 by the time the SPX might drop that far, if it does continue dropping.

So, we have an intact downtrend as we go into the last few minutes of trading, but we had an intact uptrend, using the same 30-minute 9-ema benchmark, this time yesterday. I see big triangles on the daily charts of all the major indices, and we just can't count on anything while prices are within those narrowing triangles. The Keltner setup on the 30-minute chart suggests that the SPX heads lower, but that whole setup could be erased by the end of the day (close above 1355) or rendered meaningless if New York comes up with some workable plan for rescuing and not rendering bankrupt the bond insurers by tomorrow morning.

Jane Fox : 2/14/2008 3:52:40 PM

Well I thought we had a good trade here but the bears were too strong for us. Stopped at 12398.

Jeff Bailey : 2/14/2008 3:52:02 PM

Chad President Declares State of Emergency

Jeff Bailey : 2/14/2008 3:50:16 PM

Venezuela's Rational ...

DJ- ExxonMobil Corp. (XOM) has demanded $5 billion for a nationalized oil project in Venezuela, a figure that far exceeds what the government considers is a fair compensation, the country's oil minister said Thursday.

"Fair compensation is not even 10% of what Exxon demands," Oil Minister Rafael Ramirez told reporters as he left Congress.

Ramirez also said oil spot sales to Exxon were being suspended and Venezuela was considering what actions to take regarding oil supply to the refinery in Chalmette, La. The refinery is a joint venture between Exxon and Petroleos de Venezuela SA, or PdVSA, the state oil company.

The minister said PdVSA was now selling spot crude to other customers.

On an ongoing legal battle with Exxon, Ramirez said Venezuela had handed in its affidavits to contest an asset freeze ordered by a London court.

Exxon and Venezuela are entangled in what seems like an increasingly bitter legal dispute after Venezuela nationalized a heavy-oil upgrading venture as part of last year's nationalization drive by President Hugo Chavez.

Jeff Bailey : 2/14/2008 3:47:44 PM

XOM $85.80 +0.36% ...

Jeff Bailey : 2/14/2008 3:47:12 PM

Venezuela Oil Min: Exxon Compensation Should Be 10% Or Less of $12B

Jeff Bailey : 2/14/2008 3:43:06 PM

FGIC must be privately held.

Jeff Bailey : 2/14/2008 3:40:37 PM

MBI $12.60 +8.50%

ABK $10.68 +14.08%

MTG $13.10 +3.88%

At this point, would have to think some short-term bears covering. Maybe those that thought rumored "downgrade coming" one of these three.

Jeff Bailey : 2/14/2008 3:38:52 PM

Here it is ... Moody's Downgrades FGIC ... Link

Linda Piazza : 2/14/2008 3:34:24 PM

The SPX and OEX again found resistance at their 30-minute 9-ema's. Those averages have now flattened, which is a slight improvement, but there's no proof that the tenor has changed in a major way as long as those 30-minute closes are below that average.

With that said, it's going to be hard to trust much of what happens in the next 30 minutes, with Friday morning settlement looming. Much of what happens now is going to be opex-related, I would imagine.

Jane Fox : 2/14/2008 3:30:51 PM

Looks like I miscalculated the target here.

Jeff Bailey : 2/14/2008 3:29:08 PM

03:00 Internals found at this Link

Linda Piazza : 2/14/2008 3:28:50 PM

A different news source is reporting that the downgrade for FGIC was down to A3 not BA1.

Jeff Bailey : 2/14/2008 3:26:32 PM

IWM $70.75 now ... did tap that correlation. (see 01:39:36)

Linda Piazza : 2/14/2008 3:26:20 PM

Jeff, I mentioned it earlier in my 2:59:57 post, but we were all too busy to do anything but make our own posts, I imagine. It was FGIC's senior debt, downgraded to BA1 from AAA.

Linda Piazza : 2/14/2008 3:24:41 PM

The SPX and OEX are both above their respective 15-minute 9-ema's now. They're also slightly above and testing their 30-minute verions, at about 1356.20 on the SPX and 626.50 on the OEX.

I mentioned earlier the "cause" of the decline, but we techical traders know that the indices had vulnerability to the levels that were hit, and that those levels were also levels from which indices might bounce. I was already mentioning those potential target/support levels in my 2:42:26 and 2:52:22 posts, well before that news surfaced, advising bears in that 2:52:22 post to be adjusting their stops. As Keene mentioned in another context earlier today or yesterday, the news or so-called cause is just the precipitant to make happen what looked likely to happen anyway.

Now bears have to see whether this bounce holds, either.

Jeff Bailey : 2/14/2008 3:23:40 PM

CNBC mentioned moments ago about some type of Moody's downgrade on a bond insurer. Didn't catch it, but it did NOT sound like any I've been following here.

Jane Fox : 2/14/2008 3:23:33 PM

Stop now just under 12400 at 12398. alert

Keene Little : 2/14/2008 3:21:06 PM

Keeping it simple for now, watch the broken uptrend lines from Monday's lows. For SPX it's curently near 1360, interestingly the same level I was looking at before for a correction to today's decline. We could get a bounce followed by another leg down as part of a larger correction (and then head higher again). The point about these corrective moves is that it makes it very difficult to figure out the longer term pattern. So stick with the trend lines for now.

Jeff Bailey : 2/14/2008 3:20:20 PM

MBI alert! $13.01 +12% ... above $12.50 strike.

Jeff Bailey : 2/14/2008 3:19:39 PM

These gyrations last several days will with a Feb expiration option trader. Usually knee-jerk them at the highs and the lows.

Jane Fox : 2/14/2008 3:18:39 PM

Once YM gets to 12448 raise the stop to 12393.

Jane Fox : 2/14/2008 3:17:33 PM

Target on this trade is 12421 - 12384 = 37 12421 + 37 = 12458

Jeff Bailey : 2/14/2008 3:18:22 PM

Feb 5th ... NYSE NH/NL 20:76 and NASDAQ's 41:104

RUT.X Qs1 benchmark. See yesterday's note and today's chart.

Keene Little : 2/14/2008 3:16:48 PM

That spike down and now recovery has messed up the wave pattern. Instead of a 5-wave move down today it's now a 7-wave move which is a corrective move (two a-b-c's separated by an x-wave). This leaves the door wide open for another rally leg to a high above yesterday's.

Jane Fox : 2/14/2008 3:14:41 PM

I am now long YM at 12421 with a stop at 12384.

Linda Piazza : 2/14/2008 3:13:56 PM

I was just able to exit 25 contracts of RUT MAR 820/830 calls for $0.20, locking in the rest of my profit. I mention this because some subscribers have asked me to mention what I'm doing in my journey to ameliorate my market risks as much as possible. Some don't see any sense in closing them out and giving up profit and just prefer to let them expire worthless, but it's those times when a "safe" spread doesn't turn out to be safe on opex week that have prompted me to change my trading plans. It's of course still weeks before March's opex, so I'll look for another opportunity to enter SPX bear call spreads if there's a rally, another plus to doing this. The second opportunity doesn't always come around, of course.

In another account, I exited MAR SPX bear call spreads (20) about a week ago, and I exited some bull put spreads (15) yesterday, for those who missed those posts. My point is that you'd be surprised how often it's possible to exit early, if you so desire, if you just check your accounts every day and see when spreads have narrowed enough to exit and lock in profit.

Jeff Bailey : 2/14/2008 3:10:51 PM

See this stuff as I update the 03:00 Internals.

Jeff Bailey : 2/14/2008 3:10:27 PM

VXN 26.46 +4.37% ... its "spiked" up as VIX.X spiked down.

Jeff Bailey : 2/14/2008 3:09:51 PM

VIX.X 25.33 now ... tough to say if that was a "bad tick" spike down to 23.98 or not.

Jeff Bailey : 2/14/2008 3:07:22 PM

TRINQ ticked just above WEEKLY 1.516 at 02:45-50, then back lower. Now 1.37.

Jane Fox : 2/14/2008 3:04:45 PM

Jeff, my VIX took a huge spike down but I thought it was just a data issue.

Linda Piazza : 2/14/2008 3:01:26 PM

Or at least CNBC concludes that's why the markets spiked down.

Jeff Bailey : 2/14/2008 3:01:15 PM

Could be a wild one tomorrow.

Jeff Bailey : 2/14/2008 3:00:09 PM

Anyone see any unusual jump in Option volume on the SPX/SPY as VIX.X went new low? ... SPY $135.27 now.

Linda Piazza : 2/14/2008 2:59:57 PM

That spike down apparently came courtesy of Moody's, which has just downgraded FGIC's senior debt.

Keene Little : 2/14/2008 2:59:42 PM

I won't say that spike down was engineered but with the quick recovery it does look a little suspicious.

Jeff Bailey : 2/14/2008 2:59:11 PM

Lots and lots of "round numbers" here.

Jane Fox : 2/14/2008 2:58:50 PM

Only the brave will take this trade but I see a YM long at 12421. Stop should be below daily lows but that is a loonnnggg ways off so I will put it at 12384. alert

Jeff Bailey : 2/14/2008 2:57:54 PM

Satellite is expected to hit earth during 1st week of March.

I think that is a minor "Bradley Turn" date.

Sun, moon and stars ... you know the drill.

Keene Little : 2/14/2008 2:56:07 PM

SPX and ES closed their Feb 5th gaps on that spike down.

Linda Piazza : 2/14/2008 2:55:55 PM

For the SPX and OEX, the 15-minute 9-ema's are now at 1353.69 and 625.49, respectively. You want those to hold on 15-minute closes, although the 30-minute versions are more reliable. Something weird is happening with the VIX, though, and I don't know if it's a reporting error, an opex-related action or a predictor that price are about to shoot skyward!

Jeff Bailey : 2/14/2008 2:56:02 PM

News regarding satellite is it is a broken spy satelling. President Bush has ordered Navy ship to shoot it down. Potential danger to people from the rocket fuel it is carrying.

Keene Little : 2/14/2008 2:53:56 PM

It looks like a few stops were hit on that quick flush below today's low, and now starting a little spike back up. Opex will have an influence today as traders hedge/exit their plays.

Jeff Bailey : 2/14/2008 2:53:52 PM

SPY $135.05

Jeff Bailey : 2/14/2008 2:53:41 PM

VIX.X alert! 23.98 -3.61% ... session lows. ????

Linda Piazza : 2/14/2008 2:53:38 PM

Jane, I don't think my VIX is reporting properly, either. It's currently showing a steep drop to 23.98!

Jeff Bailey : 2/14/2008 2:53:10 PM

Bush Orders US To Shoot Down Satellite On Gas Fears - Pentagon

Linda Piazza : 2/14/2008 2:52:22 PM

The SPX and OEX are both dropping straight into that potential Keltner support that I just mentioned, at about 1349-1350 for the SPX and 623 for the OEX. While bears should feel cheered that the 15-minute and 30-minute 9-ema's continue to hold as resistance on their respective closes and that there has been a continuing pattern of lower highs and lower lows all day, be aware of that potential support and act accordingly in adjusting your stops. This is support that often holds, although it doesn't always, of course.

Those of you in threatened credit spreads should not count on it holding, of course, if something is happening here that forces you into decision time with your spreads, whatever they might be. Although I'm warning bears to be wary of this potential support, we're still in a downtrend for the day.

Jane Fox : 2/14/2008 2:50:56 PM

Well that bottom for the day didn't last long did it?

Keene Little : 2/14/2008 2:49:25 PM

Early failure of the bounce. Hmm, not good.

Jane Fox : 2/14/2008 2:47:15 PM

My VIX has flatlined now so I think it is not reporting properly.

Jeff Bailey : 2/14/2008 2:46:37 PM

10-year YIELD ($TNX.X) up 13.6 bp at 3.83%. This is 38.2% conventional (10/15/07 relative high to recent low).

Linda Piazza : 2/14/2008 2:45:11 PM

The advdec line is approaching its low of the day but isn't yet below that -1729 figure. It's at -1682 as I type.

Linda Piazza : 2/14/2008 2:42:26 PM

Both the 15-minute and 30-minute 9-ema's are holding as resistance on the respective 15-minute and 30-minute closes for the SPX and OEX. The 15-minute versions are now at about 1354.70 for the SPX and 626 on the OEX. Both have potentially strong support beneath them, and until there's a steep decline through that support, these indices are likely to keep bouncing up to test resistance. It's as if they're dropping down and hitting a taut trampoline. Prices have got to rip through the trampoline or they'll keep bouncing. On 15-minute charts, that support is down to about 1348.50 for the SPX and 623 for the OEX, but the strongest support is near the day's lows on each.

Jeff Bailey : 2/14/2008 2:41:39 PM

INDU Components with VXO 5-day, 20-day Net%. Don't forget that on Tuesday, CVX and BAC come in while MO and HON go out. Link

Keene Little : 2/14/2008 2:39:08 PM

For those of you in NDX spread positions, it's looking like NDX could be breaking down as well. I had mentioned in last night's newsletter that NDX shows a better possibility for a continuation of its rally but not if the broader market doesn't cooperate. The updated 60-min chart now has the key level for the upside at yesterday's high near 1824: Link

If it can get a little more of a bounce this afternoon then it too will have the same setup for a down day tomorrow. If it drops a little lower this afternoon then it could be setup for an early-morning bounce (to test its broken uptrend line?) before tipping back over. We'll see how it sets up over the next 90 minutes.

Linda Piazza : 2/14/2008 2:34:39 PM

The TRAN got pushed back fairly soundly from its sharp push higher during the last 15-minute period. It closed in the bottom half of its range for that 15-minute period. It's still trying to push higher, though. Its climb does not look bullish on the 15-minute chart, and in fact looks as if it might soon need to retrace toward 4700, but that's not what the prices are doing right now, as I type, and it's looking stronger than it "should," given those candles and that action during the last 15-minute period. Another burst up toward 4740 can't be ruled out. The TRAN is at 4722.49 as I type, and I'm watching it as a sort of leading indicator for the SPX, OEX, and Dow, and not as a trading vehicle.

Jeff Bailey : 2/14/2008 2:30:49 PM

A couple of weeks ago, I wouldn't have QUESTIONED the selling of covered calls on PBR.

Jeff Bailey : 2/14/2008 2:29:48 PM

Get the feeling that PBR is simply "held back" today at $115 strike.

Linda Piazza : 2/14/2008 2:29:25 PM

At 1356.62, the SPX just climbed underneath the 30-minute 9-ema, now at about 1357.10. This moving average has been a benchmark for the rally mode all day yesterday and then a benchmark today as prices declined. There hasn't been a 30-minute close above that average since the first hour of trading today. Bears want it to hold as resistance this time, too, and in fact want the SPX to be pushed back strongly, while bulls want a 30-minute close above it.

Frankly, benchmark, smenchmark lately! I've been studying daily charts this afternoon. The day after the FOMC meeting, I questioned on the MM pages whether the indices might be setting up big triangles on their daily charts, with huge volatility that would tamp down, and that does appear to be occurring. Trading conditions while prices are inside a narrowing triangle are just terrible.

Jeff Bailey : 2/14/2008 2:29:19 PM

USO $75.78 +2.28% ... sticks its head above WKLY R2.

Jeff Bailey : 2/14/2008 2:28:31 PM

PTR has 1,397 Call OI here at $150.00 then 795 at $155, then 1,644 and 1,638 at $160/$165.

Put OI is heaviest at $140.

Jeff Bailey : 2/14/2008 2:26:01 PM

Current OPEN MM profiles that I've made and Watch List found at this Link

BOOM ... NO new put positions. With today's market action, I would CERTAINLY have thought bidders light. Instead, ELEVATES to $60 strike!

Keene Little : 2/14/2008 2:25:57 PM

Notice the overlapping highs and lows now in the bounce off today's low. This helps confirm the likelihood that it's a corrective bounce and not the start of something bigger to the upside. The pattern remains on track for a down day tomorrow.

Linda Piazza : 2/14/2008 2:24:47 PM

The TRAN just shot higher, so watch the SPX, OEX and Dow.

Jeff Bailey : 2/14/2008 2:17:05 PM

QQQQ ... difference between WKLY Pivot ($43.79) and conventional 19.1% ($44.19) about $0.40.

Jeff Bailey : 2/14/2008 2:15:47 PM

That's right ... conventional 19.1%.

Jeff Bailey : 2/14/2008 2:14:54 PM

QQQQ $44.21

Jeff Bailey : 2/14/2008 2:14:22 PM

Today's high on the VXN has been, been .... 26.43.

Jeff Bailey : 2/14/2008 2:13:25 PM

VXN WEEKLY Pivot Levels have been ... 26.40, 28.25, Piv= 30.88, 32.73, 35.36.

Due to screen capture size, I can only track VIX.X. Would love to track VXN and VXO for you though.

Linda Piazza : 2/14/2008 2:11:41 PM

Thanks again, Jeff. As a former almost exclusive OEX trader, I knew it was OEX-based.

Jeff Bailey : 2/14/2008 2:10:39 PM

So far this week, VXN.X has traded 30.35 to 24.88. Up until today, more put sellers/call buyers than put buyers/call sellers.

Jeff Bailey : 2/14/2008 2:08:26 PM

VXN.X 25.92 +2.24% ....

Jeff Bailey : 2/14/2008 2:07:57 PM

QQQQ $44.21 -1.27% ... session low has been, been ... $44.06.

Jeff Bailey : 2/14/2008 2:05:08 PM

Linda, the VXO just "narrows in" on the OEX components (doesn't include the other 400 of SPX) and the Dow 30 are in the OEX.

Breaking news and reaction to the news of a BIG PRICE weight in the INDU/DIA or a BIG CAP weight in the OEX can have major near-term implications. Into an expiration, a "jump" or "drop" below a heavy OI can really trigger everyone getting on the same side of a trade.

Over the years, we've seen it!

Keene Little : 2/14/2008 2:04:27 PM

Assuming for the moment that the day's low is in (looking a little iffy as I type this), we're due a bounce to correct today's decline and that should set up a down day tomorrow. If today's decline continues, watch gap closure just above SPX 1348 and then the bottom of the down-channel near 1345. Price just broke the downtrend line as I'm finishing this up.

For those of you in SPX (or RUT) credit spreads, this might help you decide whether or not you want to risk what happens at tomorrow's open and what kind of settle price we get tomorrow morning.

This 5-min chart shows a typical 3-wave a-b-c bounce that retraces slightly less than 50% in 62% of the time it took for the 1st wave down (wave (1) at today's low). That places the end of the bounce near 1360 by 3:30 this afternoon: Link

It's not uncommon to see a gap in the middle of the 3rd wave (the next leg down in this case). That means we could see a gap down and further decline right out of the gates tomorrow morning. Depending on how it looks just before the close I'll update this picture but based on what I see here, if it plays out like this, I see downside risk for your spreads (your bull put spreads anyway, depending on your strike levels).

Linda Piazza : 2/14/2008 2:03:05 PM

The SPX's 30-minute 9-ema is now at 1356.89. The OEX's is at about 626.60.

Jeff Bailey : 2/14/2008 2:01:43 PM

RUT.X options montage with OI as of last night's close Link

Linda Piazza : 2/14/2008 2:00:49 PM

Right now, the VXO is still hovering near that rising trendline off the day's low, not able to sustain a bounce above it, so the evidence is mixed. It's still climbing a rising trendline--tentatively now--and it did reach a new high as OEX prices dropped to the day's low, but now it needs to bounce more strongly if bears want reassurance. It's at 27.02 as I type.

Linda Piazza : 2/14/2008 1:58:57 PM

Jeff, thanks for your input on the VXO. I've heard in the past that professional traders may actually watch it more than the VIX, so your corroboration is appreciated. That's why I monitor it, too.

Linda Piazza : 2/14/2008 1:56:29 PM

From a Keltner standpoint, it's soon going to be do-or-die time for the VIX. Either it's going to find support at its converging 9- and 45-ema's, both near 25.38-25.40 and bounce, or it's going to lose that support and retreat further, perhaps to 25.17, from which point we'll have to see what happens next. Of course, there's always the sideways moves, but that seems less likely. The VIX is at 25.52 as I type.

Jeff Bailey : 2/14/2008 1:54:16 PM

OEX and DIA traders monitor the VXO.X like a hawk. It measures put/call buying and selling on the BIG guns that comprise all of the OEX and DIA components.

Jeff Bailey : 2/14/2008 1:52:21 PM

IWM Options Montage ... OI as of yesterday's close. Link

Linda Piazza : 2/14/2008 1:42:54 PM

I don't know that many people watch the VXO any longer (old VIX) but I sometimes find that it gives me a better perspective on what's happening than does the VIX. I just noticed that the VXO did reach a higher high during the previous 30-45 minutes, unlike its cousin, the VIX. However, it's now testing the ascending trendline that's been holding all day. Without a bounce soon, it's going to violate that rising trendline. So, there's a mixed outlook here with the VXO. Much depends on how this support test turns out. For newbies, remember that you want the VIX (or VXO, in this case) to go the opposite direction of your equity trade. As I type, the VXO is at 26.81.

Keene Little : 2/14/2008 1:42:22 PM

The first thing that has to happen now, to tell us the 5-wave move down has completed, is for the downtrend line from the high just before 10:30 AM to be broken. It's currently just below SPX 1356 and coming down.

Jeff Bailey : 2/14/2008 1:41:30 PM

With the NYSE and NASDAQ 5-day NH/NL ratio, "Bailey Wave" traders with the RUT.X have pretty good idea where trending resistance/support is at.

Throw in a little StockTrader's Almanac too.

Jeff Bailey : 2/14/2008 1:39:56 PM

IWM $70.46 -1.93% ... will note QCharts' DAILY S2 $70.22 and WKLY Pivot $70.22.

Linda Piazza : 2/14/2008 1:39:02 PM

The SPX's 30-minute 9-ema is now at 1357.26; the OEX's, at 626.92. Bears want these indices to find resistance at those levels or lower on 30-minute closes.

Linda Piazza : 2/14/2008 1:37:29 PM

The advdec line is now at -1640, hovering along that Keltner target and potential support line that I've been mentioning. If the advdec line should rise, bears would prefer that it find resistance from about -1500 up to about -1300, and then turn down again from there.

Linda Piazza : 2/14/2008 1:33:58 PM

I was about to post that the VIX had not yet reached a new high of the day, when I thought that Jane had likely already noticed and posted that information. She of course had done so. Here's a Keltner outlook: The VIX has light Keltner resistance on 15-minute closes at 25.69, and support that appears stronger, down to about 25.30. Bears would like to see that 25.30-ish support hold on 15-minute closes and for the VIX to then push above that next resistance and maintain values above the previous 25.64 high of the day. The VIX is at 25.48 as I type, consolidating above the so-far-still-rising 15-minute 9-ema. I could see it breaking either direction here, or rather the Keltner setup shows the possibility that it could rise toward 26-26.15 as easily as drop toward 25 or 24.50.

Jeff Bailey : 2/14/2008 1:31:36 PM

NASDAQ's 5-day NH/NL ratio "cool's off" from 11:00

Jane Fox : 2/14/2008 1:31:09 PM

Macd is diverging as well. Link

Jeff Bailey : 2/14/2008 1:31:02 PM

01:00 Internals found at this Link

Keene Little : 2/14/2008 1:25:27 PM

As Jane mentioned, we've got divergence at the new low relative to the low just past 11:00 AM. This helps confirm that it's the 5th wave down and not the middle of a stronger 3rd of a 3rd wave down. But I still the possibility for gap closure if it briefly consolidates here before one more final low for the day.

Linda Piazza : 2/14/2008 1:24:46 PM

The SPX is currently testing its daily 10-sma.

Jane Fox : 2/14/2008 1:22:28 PM

Ok so here I go out on a limb again. I think the bottom is in for the day.

Jane Fox : 2/14/2008 1:19:22 PM

This is the kind of divergence you want to watch for because it is the market talking to you.

Jane Fox : 2/14/2008 1:18:24 PM

VIX is not confirming the S&P futures new daily lows so bears beware. Link

Linda Piazza : 2/14/2008 1:14:32 PM

There's potential support (Keltner, gap, historical) for the OEX in the 1346-1352 zone. If the OEX bounces, bears want to see the 15-minute 9-ema maintained as resistance on 30-minute closes, with that now at 1358.04. I'd like to switch to a 15-minute chart because its benchmarks are closer, but the SPX hasn't been adhering as well to those benchmarks, trading a little over or under them into closes.

Linda Piazza : 2/14/2008 1:10:18 PM

The SPX and OEX have just closed 30-minute periods a benchmark Keltner support line and now threaten the one that has held all day on 30-minute closes, that at about 1353.50 for the SPX and at about 625 for the OEX.

Jeff Bailey : 2/14/2008 1:09:19 PM

Near term, I'd consider option expiration as having GREAT impact on how things have traded. KNOW where the OI is at and where the "Max Pain" is being delivered.

Keene Little : 2/14/2008 1:08:12 PM

Gap closure for ES would be at 1349.75.

Jeff Bailey : 2/14/2008 1:07:02 PM

Email Question: ... Jeff, How much faith do you think traders have for the various bull and bear days with the STA? I really like all the information in it, but would like to try and benefit more from the historical bull and bear days. Any tips you could share?

Jeff's Reply: ... Over the years, I've seen the StockTrader's Almanac show some very good bull and bear day matches, but there's also been some when the markets traded just the opposite. I think a "key" is to try and place the odds in a trader's favor and look for bull/bear day setups at LEVELS that would make sense. For instance, look for a "bull" day as the index (Dow/S&P/NDX) comes into a level of support, or has closed above a key level of resistance, where you can play the bull history with a tight stop. Look for a "bear" day at a key level of resistance where sellers will likely be lurking, or a close below a key level of support.

Here's a table I put together this morning for your question. The GREEN dates are days that are historically BULLISH, and RED dates are days that are historically BEARISH.

So far this year, the Dow days bull/bear have been accurate 6 out of 9, so a good batting average of 67%. I averaged the historical BULL days and so far the average is +1.12%. I averaged the BEAR days and so far the average is -1.17%.

S&P 500 is about the same. Perhaps broader number of stocks has BULL day average +0.61% and BEAR day average -0.90%.

NASDAQ-100 so far is 5 for 9 with a batting average of 56%. Maybe not so "confident" at this point. BULL day average -0.86% and BEAR day average -1.86%.

Here's the table Link

Tomorrow has historically been a BULL day (D 81% of time) (S 81% of time) (N 71.4%). Then Tuesday/Wednesday of next week tend to be BEAR days.

Keene Little : 2/14/2008 1:06:15 PM

Looks like we're going to get the 5th wave down. Watch SPX 1352 for support and then a turn back up to correct today's decline (38%-62% retracement) that should take up the rest of the day and then set up another stronger decline tomorrow. If SPX blows through 1352 then gap closure at 1348.39 (Feb 12th close) would be next (and the 5th wave would equal 162% of the 1st wave at 1347).

Jane Fox : 2/14/2008 1:05:06 PM

I expect the SPX to break the 1400 resistance and confirm the higher low made on February 7th. It would be much more bullish if this market broke that resistance before making another swing low but may not happen. Link

Linda Piazza : 2/14/2008 1:04:15 PM

The VIX is attempting to get past that resistance again, having held the support of its 15-minute 9-ema. It would have to maintain values above about 25.64, the day's high, to offer a lot of comfort to bears, though. It's at 25.40 as I type.

Jane Fox : 2/14/2008 1:03:46 PM

All markets are trading under their overnight lows. Link

Keene Little : 2/14/2008 12:40:19 PM

In order for today's decline to become a 5-wave move down, the current bounce cannot overlap the low at 9:45 this morning. That would create overlap between the highs and lows that I often talk about in helping to determine whether or not the move is corrective or impulsive.

So for SPX a bounce above 1361.27 would leave today's decline potentially a 3-wave corrective pullback (which would be confirmed with a move back above the bounce high at 10:20 AM). But if the current bounce turns back down and makes a new low then we'd get the impulsive 5-wave move. Still waiting for resolution here. 3-min chart: Link

Linda Piazza : 2/14/2008 12:37:53 PM

I have to keep going back to the 30-minute charts because those continue to show relevance. For the 30-minute 9-ema is at 1360.47, and for the OEX, at 628.27. Bears want those to continue holding on 30-minute closes and then for the SPX and OEX to roll to new lows and sustain them.

Linda Piazza : 2/14/2008 12:26:47 PM

The bounce has taken the SPX and OEX up to test their 15-minute 9-ema's now at about 1358.60 and 627.60, respectively. Again, that's a normal and natural action to occur, but that average has flattened now, and so its resistance might not be as strong as it would be if it were descending sharply. These markets can and do change tenor quickly--an effect that might be exacerbated by the fact that we've been hearing that Senate committee testimony quite a while now and can begin to disgest what's being said--so be careful about your positions.

Linda Piazza : 2/14/2008 12:12:13 PM

Just as Keltner channels predicted, the advdec line is attempting a bounce and is now at -1526, and the VIX is still flattening at Keltner resistance. Nothing major has changed yet, but keep on the watch as these markets either turn on a dime or sneakily test key areas and then suddenly change tenor there.

Keene Little : 2/14/2008 12:11:28 PM

The little sideways consolidation since this morning's low fits so far as the 4th wave correction and could be ending soon. Another leg down (5th wave) would then set up a larger bounce to correct today's decline. So the overall feel for a portion of today may be just a choppy whipsaw kind of day.

Linda Piazza : 2/14/2008 12:05:09 PM

The advdec line has now dropped almost to its Keltner target. That was originally near -1590, but these lines are dynamic and will drop a little as values drop. In the advdec line's case, because numbers are so large and the line moves so quickly, it sometimes drops a lot. That potential target and potential support is now at about -1700, with the advdec line now at -1603. What's the significance of this? You should watch closely if the advdec line should bounce from this potential support, as you don't want a bounce to get too large.

Jane Fox : 2/14/2008 12:03:35 PM

Crude is making higher highs and is bullish. This should help us Goldbugs. Link

Linda Piazza : 2/14/2008 12:02:31 PM

The VIX hit potential resistance at about 25.20 on 15-minute closes, and it's stalled there. The last two 15-minute candles produced long upper shadows on the candles, and that's sometimes indicative that values need to pull back to stronger support. If not that, then it's usually indicative of a need to consolidation sideways before more gains. Those leaning to the bearish side with equities today want the VIX to find support on 15-minute closes at the rising 9-ema, now at 25.14 but beginning to flatten a little. Actually, those leaning to the bearish side on equities just want the VIX to keep gaining from here, but you know what I mean.

Jane Fox : 2/14/2008 12:01:26 PM

Internals are very bearish today. Link

Linda Piazza : 2/14/2008 11:57:48 AM

I don't like to use the 30-minute chart when giving outlooks for those traders who might be looking for short-term trends, but the 30-minute chart is showing much relevance to the action on the SPX and OEX. I need to point out what I'm seeing from time to time. The SPX has potential support on 30-minute closes at 1353.55 and then again at about 1355.10. It could be significant support, and especially significant if it's broken on 30-minute closes. The SPX pierced the first level and reached down to the lower one, then bounced. Barring a strong move down in the next few minutes, it will likely hold that support on this 30-minute close, anyway. However, it will also likely close a second 30-minute period below the 30-minute 9-ema, now at 1360.60. So, if the SPX should bounce from this support, not a given, then bears want that 9-ema to hold as resistance on 30-minute closes.

Jeff Bailey : 2/14/2008 11:48:21 AM

Russell 2000 (RUT.X) ... SAME "Bailey Wave" and your conventional Link

Linda Piazza : 2/14/2008 11:45:47 AM

The SPX's 15-minute 9-ema is now at 1360.15; the OEX's, 628.22. Potential downside targets and potential support on 15-minute closes are at 1351.95 and 1346.06 for the SPX and 624.48 and 621.86 for the OEX.

Jeff Bailey : 2/14/2008 11:32:44 AM

Russell 2000 Index ($RUT.X) 712.63 -1.28% ... here's an updated daily interval chart with Quarterly/Monthly pivot retracement and "Bailey Wave" Andrews Pitchfork (modified schiff) Link

Jeff Bailey : 2/14/2008 11:26:15 AM

11:00 Internals found at this Link

Note(s): It would take a closing measure of 28.00% for the NYSE's 5-day NH/NL ratio to see a 3-box reversal back higher. It would take a closing measure of 32.00% for the NASDAQ's 5-day NH/NL ratio to see a 3-box reversal back higher.

Keene Little : 2/14/2008 11:24:38 AM

The 2nd leg down in the decline from yesterday's high for SPX has now reached the level where it is 162% of the 1st leg down (1354.52) so a bounce can be expected. If we see a sideways/up consolidation (4th wave correction) and then a new low that would then give us 5-wave move down and indicate a trend change (back to the downside). So far the drop from yesterday is just a 3-wave pullback so that's why I'm watching to see what kind of bounce we now get. A 4th wave correction to the decline should take 30-60 minutes.

Linda Piazza : 2/14/2008 11:23:32 AM

Both the SPX and the OEX blew through that potential support I just mentioned, unless they hould bounce back above it by the close of this 15-minute period. That remains possible, but the next potential support on 15-minute closes should be mentioned in case the bounce doesn't occur. That's at 1351.88 for the SPX and 624.45 for the OEX.

Jane Fox : 2/14/2008 11:23:18 AM

Here is WSJ take on Bernanke's comments. - WASHINGTON -- Federal Reserve Chairman Ben Bernanke on Thursday kept the door open to further interest rate reductions, saying downside risks to economic growth remain from housing, employment and credit markets.

But he appeared more upbeat on the economy's prospects for later this year and next when the combination of fiscal and monetary stimulus kicks in.

"At present, my baseline outlook involves a period of sluggish growth, followed by a somewhat stronger pace of growth starting later this year as the effects of monetary and fiscal stimulus begin to be felt," Mr. Bernanke said in prepared testimony to the Senate Banking Committee.

Mr. Bernanke was testifying along with Treasury Secretary Henry Paulson and Securities and Exchange Commission Chairman Christopher Cox. Mr. Paulson Paulson told Senators that he expects the economy to stay in positive territory, while Mr. Cox talked about enforcement efforts underway.

But while he envisions "an improving picture" on the economy, Mr. Bernanke cautioned that "downside risks to growth remain, including the possibilities that the housing market or the labor market may deteriorate to an extent beyond that currently anticipated, or that credit conditions may tighten substantially further."

Linda Piazza : 2/14/2008 11:13:39 AM

Both the SPX and OEX are approaching potential short-term Keltner support, so potential bounce points. If they should bounce, bears want to see them now sustaining 15-minute closes below the descending 15-minute 9-ema's, with those now at 1362.36 for the SPX and 629.32 for the OEX.

Linda Piazza : 2/14/2008 11:11:56 AM

USDJPY now at 108.01, threatening to break through support that angles down to about 107.95 on 15-minute closes. It's currently testing the bottom of that congestion zone in which it's been moving, but it should be noted that this is also potential support.

Keene Little : 2/14/2008 11:09:20 AM

SPX needs to drop down to 1354 before it will test its uptrend line from Monday.

Keene Little : 2/14/2008 11:08:21 AM

The DOW is testing its uptrend line from Monday morning. If it breaks and then bounces back up for a retest, look for a shorting opportunity there (might not bounce back up though).

Linda Piazza : 2/14/2008 11:05:07 AM

Next potential SPX support is at about 1358.20 on 15-minute closes. For the OEX, it's about 627.40.

Linda Piazza : 2/14/2008 11:04:15 AM

The VIX has now erased its breakdown mode, scrambling back inside its Keltner channels. Those with bearish hopes now want it to maintain values above about 24.75 on 15-minute closes, but anything at or above about 24.70 or perhaps even 24.59 would still maintain the outlook that the VIX is strengthening after its weakness yesterday. The VIX is at 24.91 as I type.

Linda Piazza : 2/14/2008 11:01:53 AM

For the SPX, the 30-minute 9-ema is now at about 1363; for the OEX, about 629.80. I still believe, though, that these indices have to sustain values below the day's lows before the bearishness is confirmed, but it looks possible that for the first time since Tuesday, the SPX might close a 30-minute period below its 30-minute 9-ema. In fact, other than that sharp decline in the last hour of trading Tuesday, the SPX has maintained 30-minute closes above that 9-ema since about midday on Monday. However, do keep the after-effects of that single sharp violation in mind, as the SPX and OEX soon scrambled right back above that average.

Jeff Bailey : 2/14/2008 11:01:03 AM

Russell 2000 (RUT.X) 716 -0.87% ... QS1 here. Begins to confirm "Bailey Wave" pullback from 4th wave.

Linda Piazza : 2/14/2008 10:52:32 AM

Here's the scorecard so far of the "beneath the market" indicators: the advdec line is negative and consolidating near the day's lows. Bearish. The VIX is rising up as I type above the benchmark for the breakdown mode it's been in, but it hasn't yet sustained values above it, and this is only a sign of a short-term change in tenor. Could be bearish if it keeps going, but it's just not yet enough to hang one's hat upon. TRIN is 0.85. It's off its low of the day, but below resistance at about 0.93 and certainly below the 1.00 benchmark that many study. Bullish, although one should keep it on the radar screen since it's climbing. USDJPY at 108.21 is continuing its steep decline off the pre-market high of 108.58, but it's still just dropping within the consolidation zone that it had formed over the last few days. It would need to drop below 108 or maybe 107.97 and sustain values below that before any bearish (for equities) implications are confirmed. Neutral, with a slight bearish overcast shadow.

What are you going to make of that, knowing that this is an opex Thursday, that hearings are going on, and that yesterday's almost-across-the-board confirmation of bearishness was then quickly reversed? I'd be aware of some slight shifts toward the bearish side, particularly since I give some weight to the advdec line, but I'd be aware that these are so far showing the potential for chop more than anything else.

Jeff Bailey : 2/14/2008 10:47:20 AM

Permian Basin Trust (PBT) $17.17 +1.19% ... good gravy.

Jeff Bailey : 2/14/2008 10:46:43 AM

Apache Corp. (APA) $108.63 +0.37% ...

Jeff Bailey : 2/14/2008 10:46:20 AM

Chesapeake Energy (CHK) $43.33 +2.58% ... another 52-weeker.

Jeff Bailey : 2/14/2008 10:45:46 AM

EIA: Weekly Nat. Gas Storage Link ... Draw of 120 Bcf

Linda Piazza : 2/14/2008 10:45:13 AM

VIX now at 24.68, challenging the 24.75-ish breakdown benchmark, but not yet sustaining values above it. Keep an eye on this.

Jeff Bailey : 2/14/2008 10:39:23 AM


Jeff Bailey : 2/14/2008 10:39:06 AM

He's down in paragraph 6.

Linda Piazza : 2/14/2008 10:38:39 AM

My information appears to be wrong, as Fed Chairman Bernanke is speaking now, not after the market close.

Jeff Bailey : 2/14/2008 10:38:36 AM

Bernanke's Testimony Link

Linda Piazza : 2/14/2008 10:30:45 AM

VIX rising a little, but it's only at 24.58, still below the 24.74 level that it needs to maintain to have even the slightest change in shortest-term tenor, at least in my opinion.

Linda Piazza : 2/14/2008 10:27:30 AM

My charts are now showing the SPX's daily 30-sma at 1367.86, with that average pierced this morning and with the price action now having produced a doji with the upper shadow piercing the average and the body below it. This is what I expected to see in my best-guess scenario by the end of the day (piercing it and pulling back), but there's a whole lot of day ahead of us. The SPX has potential Keltner resistance at 1370.36 and then at 1375.39 on 15-minute closes. It will need to sustain values at or below the daily low today to crack that 30-minute 9-ema, though.

Keene Little : 2/14/2008 10:27:11 AM

Another bounce attempt in progress. If it fails to make a new high above yesterday's and then drops to a new daily low it should be a stronger leg down than this morning's first leg down. But a new high could carry some so don't stay short in that case.

Linda Piazza : 2/14/2008 10:22:03 AM

The advdec line is attempting a bounce, and attempting it from the -1000 area, not even dropping yet to the historical support near -1200, much less the -1590-ish downside target. Bears want the advdec line to roll down again at or before -250 to -50. Bulls want it to power through about +70, but then should be prepared for possible strong resistance near about +480 to +600. It's at -620 as I type.

Linda Piazza : 2/14/2008 10:19:49 AM

The VIX remains in breakdown mode on the 15-minute charts. It now needs to maintain 15-minute closes above 24.75 before there's even the slightest corroboration of any bearishness over even the shortest term from the VIX, at least in my opinion. It's at 24.45 as I type.

Linda Piazza : 2/14/2008 10:17:22 AM

Reader Denise let me know that in my 10:16:30 post, I wrote "bears could produce follow through" when, as she correctly surmised, I meant "bears could not produce follow through." Thanks, Denise.

Jeff Bailey : 2/14/2008 10:16:34 AM

Treasuries find sellers early with yields backing up across the curve.

Shorter dated 5-year ($FVX.X) up 8.3 bp at 2.775%, the benchmark 10-year ($TNX.X) up 9.2 bp at 3.786% and 30-year ($TYX.X) is up 8.8 bp at 4.600%.

Linda Piazza : 2/14/2008 10:14:31 AM

Think the credit crunch is solved? Here's a blurb from tonight's Wrap: Early this morning, the Fed produced its weekly figures on outstanding commercial paper, a gauge for us market watchers of how tight credit might be. Last week, outstanding commercial paper dropped for the second week in a row, the third out of the last four weeks. All categories dropped in both seasonally and not seasonally adjusted figures. Not only that, but the drop appears to be accelerating, with the drop last week amounting to $13.3 billion.

Jeff Bailey : 2/14/2008 10:12:13 AM

US Trade Balance came in at -$58.8B which was better than the -$61.8B forecast.

The Commerce Department said the deficit dropped to $711.6 billion last year (2007), a decline of 6.2%

The trade deficit with China continued to rise, jumping by 10.2% to $256.3 billion.

Linda Piazza : 2/14/2008 10:16:30 AM

With the advdec line dropping this morning, I'm not feeling particularly bullish, especially since my guess of a scenario for the day might be an early attempt at the daily 30-sma (didn't even quite happen although the SPX high of the day was close) and then a retreat. I was never sure that retreat would take the SPX far, though, and I'm just not seeing a lot of other confirmation of any bearishess. TRIN is only 0.89 as I type, the VIX is still in breakdown mode, and the USDJPY is in fact dropping from its pre-market high, but only into the congestion zone that it's been in for a few days. I'm a person who believes that volume leads price, so I'm certainly giving a lot of attention to the still declining advdec line, but even with the advdec line, the TRIN and the VIX all in accordance yesterday, bears could not produce follow through. Today, so far, there's only the very short-term action on the USDJPY and the decline in the advdec line to support bearishness. So, I'd lean temporarily but very cautiously on the side of the bears right now, but not with great hopes yet of a lot of downside.

Jeff Bailey : 2/14/2008 10:08:10 AM

Eurozone GDP rose 0.4% q/q and was slightly ahead of the 0.3% forecast.

Jeff Bailey : 2/14/2008 10:07:18 AM

France's CAC-40 ($CAC) Link ... is up 36 points, or +0.75% at 4,891. French GDP mirrored Germany's +0.3% q/q growth.

Jane Fox : 2/14/2008 10:07:14 AM

S&P futures (ES) is in sync with the VIX so the VIX will be a very good chart to keep your eye on today.

Jane Fox : 2/14/2008 10:05:28 AM

AD line is now a bearish -843

Jeff Bailey : 2/14/2008 10:05:15 AM

Germany's DAX ($DAX) Link is up 17 points, or +0.25% at 6,991. German preliminary GDP +0.3% q/q which was inline with expectations.

Linda Piazza : 2/14/2008 10:04:57 AM

Bears also need to see the VIX sustaining values above about 24.80 (currently) to even begin to change the tenor, on even the shortest term. The VIX is at 24.63 as I type.

Linda Piazza : 2/14/2008 10:03:46 AM

The SPX punched above but then closed below the 15-minute 9-ema. That's a short-term change in tenor, but the SPX is already back above that 9-ema, now at about 1364, trying again. For the OEx, that average is now at about 630.20. Bears need to see the 30-minute 9-ema's busted on 30-minute closes to see any real change in tenor. Sustained values below the lows of the day would be needed to do that.

Jane Fox : 2/14/2008 10:03:08 AM

WASHINGTON (MarketWatch) -- The Federal Reserve has done a lot to stave off a recession but stands ready to do more if the outlook darkens, Federal Reserve Chairman Ben Bernanke said Thursday. Bernanke said the Fed will be working overtime to see if the rate cuts undertaken so far are having their intended effects. Bernanke painted an "improving picture" for the economy, saying that he expects a stronger pace of growth starting later this year after an unspecified "period of sluggish growth." Inflation should moderate from its current rate, and the public's expectation of inflation should remain "reasonably well anchored," he said. But the credit squeeze should continue to dampen growth and there is no end in sight to the downturn in the housing sector, he said.

Jane Fox : 2/14/2008 10:02:32 AM

Bernanke speaking and the markets are jumping around a lot now.

Keene Little : 2/14/2008 9:58:02 AM

Starting to get a little bigger bounce now. This will be the test--we'll see if this morning's quick drop was just a pullback correction or if the bounce is just a correction of the first little leg down. For cash, short against yesterday's high is the right play.

Linda Piazza : 2/14/2008 9:54:47 AM

Keltner outlook on the advdec line: the advdec line has now set a potential downside target of -1560. However, over the last few days, it's found support near -1200, so I would say that there's historical support there that should be watched if the advdec line keeps dropping. The advdec line is at -766 as I type.

Linda Piazza : 2/14/2008 9:53:12 AM

USDJPY now at 108.35.

Linda Piazza : 2/14/2008 9:49:39 AM

The OEX and SPX both lost the support of their 15-minute 9-ema's at the close of the first 15-minute period. The 30-minute 9-ema's have held even longer as support on 30-minute closes, ever since yesterday's open, so I'm turning to those now to watch, to see if there's a more pronounced change in short-term tenor. For the SPX, that average is now at about 1362.40; the OEX, at about 629.40.

Jane Fox : 2/14/2008 9:49:15 AM

One of the most reliable patterns is consolidating at daily highs or lows but lately those consolidations seem to be doing just opposite; consolidating at daily highs are breaking lower and consolidating at daily lows are breaking higher. Link

Linda Piazza : 2/14/2008 9:47:18 AM

Do remember as you make your trading decisions today that the normal pin-them-to-the-numbers action that begins about mid-morning on an opex Thursday might be exacerbated by those who are also positioning their portfolios before the various hearings taking place today: with the bond insurers and then with Treasury Secretary Paulson and Fed Chairman Bernanke (after the close, I believe). If that time I've seen for Paulson and Bernanke is correct, remain aware that what goes on during that hearing could absolutely impact settlement numbers tomorrow morning. If you're in SPX February trades, keep that in mind when you decide whether to hold overnight. (While OEX options values would of course also be impacted at the open tomorrow, newbies should remember that the OEX February options do trade all day tomorrow and that settlement values are determined by the Friday closing values of all OEX component stocks.)

Linda Piazza : 2/14/2008 9:43:08 AM

The TRIN is dropping off its morning high. It's at 0.81 as I type, so those hoping that bearish conditions set up want it to climb again, and those hoping that bullish ones set up want it to continue lower or just stay where it is.

Linda Piazza : 2/14/2008 9:41:33 AM

USDJPY is now at 108.40.

Linda Piazza : 2/14/2008 9:40:51 AM

Correction: I was looking at seven-minute charts for the SPX and OEX earlier, with the chart setups the way I sometimes prefer them. I don't often mention them to subscribers because I know their charting systems, trading styles and preferences might not be in tune with that interval chart, but I do watch them myself when a trend gets started to give me early clues as to direction.

So, looking at the SPX on the 15-minute chart show that the SPX has so far dropped down to test the 15-minute 9-ema, now at about 1364.70, but is so far maintaining the support of that average, support that it maintained as it began climbing yesterday afternoon. The OEX is also testing (and just below) its 15-minute 9-ema at about 630.28.

Linda Piazza : 2/14/2008 9:37:31 AM

Keltner outlook on the advdec line: The advance line is threatening to lose potential support near +320. It's at +113 as I type, but the first 15-minute period is far from completed, of course. If it does lose this support on this close, it sets a potential downside target of -1500. We know from yesterday how quickly these setups can change, even when it appears that all or most of the ducks are in a row for a specific trade.

Jane Fox : 2/14/2008 9:35:49 AM

Consolidating at daily highs tells me we will get a push higher. Link

Linda Piazza : 2/14/2008 9:34:46 AM

Both the SPX and OEX are now dropping. The OEX is dropping down slightly past its 15-minute 9-ema, but the first 15-minute period is far from past. Next potential support on 15-minute closes is at 629.08 and 629.74; resistance, at 632.66 and 634.00.

Linda Piazza : 2/14/2008 9:33:24 AM

Remember something I mentioned yesterday, the possibility that the SPX could punch higher, toward the 30-sma near 1370, and then fall back. That's what I would have anticipated for today in normal market times, but these are not normal market times, so we'll have to watch closely for any signs of any such thing happening.

Linda Piazza : 2/14/2008 9:31:55 AM

SPX next potential resistance at 1368.68 and then 1373.20 on 15-minute closes.

Linda Piazza : 2/14/2008 9:30:55 AM

For reasons I honestly don't quite understand, the USDJPY has zoomed higher again. Last night, economic reports in Japan showed the economy growing much more than anticipated, which would normally have driven the yen higher, lowering the USDJPY. Articles I've read pegged the decrease relative to the dollar (so rise in the USDJPY) to traders being less risk averse than they have been in the recent past. I've seen some puzzling moves lately in the currency pairs, moves that sometimes weren't cleared up until some announcement in the next day or two. However, let's just look at what the charts are showing us, and now they're showing strength in the USDJPY, at least in the pre-market session. That supports the rise in futures from their levels of a couple of hours ago. However, you'll want to keep a watch on this because I show potential resistance at 108.56 on 15-minute closes, resistance that was tested earlier this morning. RSI is in levels that indicate that the move has been extreme. Although of course RSI can trend above 70 or below 30 on this currency pair, just as it can for anything, it doesn't tend to do so for the currency pairs. So, this currency pair suggests that, perhaps after another test of that 108.50-108.60 zone, this currency pair might temporarily run out of steam, and that warns that equities could, too. Just keep it on your radar screen. It's at 108.48 as I type, and you just don't want it to fall back below 108.00.

Keene Little : 2/14/2008 9:24:57 AM

On Tuesday I had mentioned the ES gap down on Feb 5th and the fact that the bounce that day found resistance at the bottom of the gap. I also mentioned the 50% retracement of gaps is typically a good level to keep an eye on--a failure at or below that 50% retracement level would be a bearish sign whereas a push above it will typically mean the gap will get closed.

For ES that level is 1371.50 and wasn't quite reached yesterday. The overnight high, near 2:00 AM, was 1371.50. So we've got our line in the sand and I think short against that high is the right play this morning. A run higher above 1371.50 has a good chance of running up to close the gap at 1379.25.

Jane Fox : 2/14/2008 9:23:06 AM

WASHINGTON (MarketWatch) -- Initial claims for state unemployment benefits dropped for a second consecutive week, reversing a large jump in filings late last month that had added to concerns about the economy, Labor Department data showed Thursday.

First-time claims for the week ended Feb. 9 fell to 348,000, down 9,000. The prior week's claims level was revised higher by 1,000 to stand at 357,000.

The four-week moving average of new claims -- considered a better gauge of the labor market by smoothing out volatility in the weekly data -- increased 12,000 to reach 347,250, the highest level since October 2005.

The claims data measure the number of workers who lost their jobs through no fault of their own and who become eligible for unemployment benefits. They reflect layoffs, not hiring.

Jane Fox : 2/14/2008 9:20:14 AM

WASHINGTON (MarketWatch) -- The voracious appetite of U.S. consumers for imported goods has abated somewhat, helping reduce the nation's trade deficit in December and for all of 2007, the Commerce Department said Thursday.

The trade deficit narrowed 6.9% in December to $58.8 billion, below the $61.6 billion that had been the consensus forecast of economists polled by MarketWatch.

Exports rose while imports fell, the December data showed. It was the largest monthly drop in the deficit since October 2006.

For the year as a whole, the U.S. trade deficit narrowed 6.2% to $711.6 billion from 2006's record $758.5 billion -- the first reduction in the annual trade gap since 2001 and the biggest percentage decline in 16 years.

The December trade figures could add a bit to the nation's gross domestic product for the fourth quarter. An initial reading on GDP for the final three months of 2007 showed a meager 0.6% increase in economic growth.

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